Solution

ID: past-exam-of-the-mathematics-course-of-the-university-of-cambridge/2018/ii/paper-3/29k/b/solution

The finite-horizon discrete-time fundamental theorem of asset pricing states that the market has no arbitrage if and only if there exists a probability measure equivalent to under which every integrable discounted asset price is a martingale. Such a is an equivalent martingale measure.

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